BLUE CROSS: Backs Out Of Healthy Families Contract
Blue Cross of California Friday "declin[ed] to accept" a contract to administer the state's new Healthy Families program, after refusing to agree to new provisions designed to eliminate a potential conflict of interest. The Sacramento Bee="http:> reports that the $22 million contract came under fire last week when U.S. Reps. Robert Matsui (D-Sacramento) and Pete Stark (D-Hayward) charged there was a conflict of interest because Blue Cross, which is owned by Wellpoint Health Network Inc., would have provided information to potential enrollees about the plans and enrolled beneficiaries, while also serving as a carrier. Charging that Blue Cross "would be in a position to steer business to itself," the congressmen asked the Clinton administration to reject the contract. Subsequently, the California Managed Risk Medical Insurance Board, the state agency that awarded the contract to Blue Cross last week, "demanded that [Blue Cross] hire an entirely separate staff for its administrative role." John Monahan, general manager of Medi-Cal programs for Blue Cross, said, "This mandates us to duplicate our administrative resources, making it cost-prohibitive and impossible for us to meet the July 1, 1998, implementation date." Cliff Allenby, chair of the medical insurance board, said it will meet again March 16 to determine whether to give the contract to another bidder to or to rebid it. However, he said that if the "contract is rebid" the implementation of Healthy Families will be delayed beyond its current July 1 kickoff date (Bernstein, 3/7).This is part of the California Healthline Daily Edition, a summary of health policy coverage from major news organizations. Sign up for an email subscription.